Megatrends

The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.

Gluten-Free Fast Becoming New Industry Standard in Baked Goods, with High Fibre One to Watch

The main pressures facing bakery over the last year are not dissimilar from those facing the wider food industry. The rising popularity of low-carb diets such as Atkin’s and Paleo in advanced countries and the reduction in waste and lifting of subsidies in emerging markets have taken their toll on the global baked goods market. Bread has borne the brunt of this. According to Euromonitor International’s recently published data, bread volumes have been hovering around 107 million tonnes since 2010, with retail volumes in Western Europe dipping by as much as 2% over 2011-2016.

However, value figures tell a different story. By the end of 2016, baked goods as a whole is expected to grow by 1% globally, with Asia Pacific showing as much as 4% growth. In Western Europe, which is projected to face the biggest contraction in volume terms, bread value sales are projected to grow by 2% in 2016 as consumers increasingly opt for high-quality variants in bread, unlike in pastries and frozen baked goods, where value-for-money options remain popular.

Gluten free is becoming an industry-wide trend

Free-from diets continues to be a fast growing trend, not only followed by coeliac patients, but also by the general health-conscious public holding the belief that gluten-free products will help them overcome problems related to bloating or indigestion. The global market for gluten-free bread was valued at USD1.0 billion in 2015, accounting for 31% of all gluten-free food globally, with USD953 million coming from developed countries, making it a mainstream choice for the Western consumer.

To keep up with the rising demand for gluten-free bakery, packaged bread manufacturers, including the UK’s leading player Warburtons, are launching free-from subbrands of their flagship brands, which are faring well with consumers from all socioeconomic backgrounds. There is also a plethora of start-up companies emerging in the bakery space launching gluten-free bread, including Coconut Wraps by NUCO in the US, which is not only gluten-free but ticks all the other health buzz words, such as organic, raw, vegan, and paleo.

Coconut Wraps from NUCO Foods

Source: Own Picture from SIAL Paris 2016

In bakery aisles, the gluten-free trend is moving beyond bread to the likes of cakes, pastries, biscuits, pasta and even breakfast cereals. Gluten-free breakfast cereals rose at an impressive value CAGR of 79% over 2010-2015, fuelled by the US, Australia and the UK. All the big cereal players now have gluten-free variants, with General Mills pledging to turn 90% of all of its Cheerios range gluten free by the end of 2016. In snack bars, fruit and nut bars increased at an impressive value CAGR of 25% over 2011-2016, outperforming the wider snack bars category, which rose at a 5% CAGR over the same period, thanks to the likes of Kind Bar, which has overtaken Quaker by PepsiCo and Fibre One by General Mills to become the fourth biggest snack bar brand in the US.

Free from migrates from the West to the East

The gluten-free hype is no longer limited to the remit of North America and Western Europe. In March this year, Detroit Diet Maroc launched gluten-free ready-to-eat muffins in Morocco. Although only available in the mass grocery channel, the product has so far resonated well with consumers. Similarly, Eti Gida, Turkey’s leading biscuit manufacturer, has introduced the Pronot health brand, which has a gluten-free chocolate brownie range to accompany Turkish coffee. To respond to the rising popularity of gluten-free products, retailers are moving gluten-free bakery from store perimeters and into the fresh bakery departments of supermarkets, as these receive more footfall.

Ancient grains tap into the free-from, nostalgia and naturalness trend all at once

Many ancient grains, such as amaranth, quinoa, buckwheat, millet and teff, are naturally gluten free, making them the go-to choice for manufacturers in the bakery space. The world’s biggest gluten-free brand Udi’s, which has recently been acquired by Pinnacle Foods, has just launched an ancient grains variant, boasting ancient grains such as millet and chia, as well as being high in omega 3- ALA and fibre. Similarly, Hovis, one of the UK’s leading packaged bread brands, formed a collaboration with The Chia Co to launch its chia loaf in February 2016, stressing its high omega 3, protein and fibre content. These new varieties are fuelling the good performance of NH high-fibre bread, which was worth USD25.0 billion globally in 2015, and is forecast to be worth USD30.0 billion by 2020. In April 2016, another major player, PepsiCo, launched a couple of new supergrain-based breakfast products under its Quaker brand in the US coming both in hot and cold forms, both of which include a blend of oats, barley, rye, flax and quinoa. The numerous product developments that include ancient grains make it clear that a niche market has gone mainstream, making it far more accessible to consumers than it has ever been.

Anti-sugar woes put breakfast cereals and sweet biscuits at risk

Together with gluten, sugar has been put in the firing line by governments, media and retailers alike. In both developed and emerging markets, how much sugar children’s food contains has come to the fore of the food debate. Leading retailers in the UK and the US have banned sales of sweet snacks such as biscuits and chocolate confectionery from their checkouts. As a result, several bakery (as well confectionery and soft drinks) manufacturers have seen their SKU count reduced in supermarkets.

Breakfast cereals has seen the brunt of this anti-sugar war. The category declined by 14% in value terms between 2011-2016 and is expected to shrink by a further 2% over the next five years. The world’s leading breakfast cereal companies including Kellogg and General Mills are struggling to keep sales afloat and turning to adjacent, less-sugar heavy categories such as crackers and savoury snacks and yoghurt to counteract concerns over sugar.

On the other hand, savoury biscuits is leading the fight against sweet biscuits by banging the drum for baked snacks. According to Euromonitor International’s latest projections, in Western Europe, savoury biscuits is forecast to rise at a 2% constant value CAGR over 2016-2021, while sweet biscuit sales are set to stagnate.

But it is not all doom and gloom for sweet bakery manufacturers. While sugar based on corn syrup or glucose might be subject to controversy, natural sources of sugar or those that get their sweetness from fibre (corn starch-sourced fibre or chicory root fibres) are gaining traction and will increasingly feature on supermarket shelves. This follows on from the EU’s recent publication of article 13.5, which states that manufacturers will be able to claim a “lower blood glucose rise” when using non-digestible carbohydrates as sugar replacers. The claim can also be used in conjunction with snappier general health and wellbeing claims, such as ‘more balanced blood glucose rise’, ‘lower impact on blood sugar levels’ and ‘keeping your blood sugar low’.

Free from grains and high fibre will be the future of the bakery industry

What is next for bakery manufacturers? As an extension of the gluten-free trend, the free-from grains trend is gaining pace. Flours made from legumes like lentils, peas or soybeans are the most visible in the market. In Canada, these varieties are already going mainstream, with major Canadian brands such as The Country Harvest, Weston Bakeries and Canada Bread all having their own veggie brands. This year, SIAL, which is the world’s largest food innovation event, featured products such as buckwheat burgers, vegan pancakes, spirulina gnocci, quinoa snack bars, and lentil pasta, which tap into both gluten-free and high-fibre brands, where the industry’s future lies.

Shortlisted gluten-free and high fibre products for SIAL Innovation Award